The risk premium of a stock is not affected by its ________.
A)undiversifiable risk
B)typical risk
C)systematic risk
D)unsystematic risk

Question

Quizplus · Accepted Answer

The risk premium of a stock is determined by its systematic risk or market risk, which is not affected by its unsystematic risk or idiosyncratic risk. Therefore, the correct choice is D, unsystematic risk. The typical risk of a stock is a broad classification and can include both systematic and unsystematic risks, so it is not a relevant factor in determining the risk premium.

The Risk Premium of a Stock Is Not Affected by Its